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Local banks are on the hunt for new talent, as lay-offs at major investment banks lead to increased opportunities for Middle East financial institutions to grab senior executives.

Investment banks in the United States have announced tens of thousands of job cuts during the past two years, replacing more senior staff with younger and cheaper employees and switching trading floors for algorithms to save costs.

That has given Middle East banks a prime opportunity to attract experienced senior executives, said Salmaan Jaffrey, a director at PricewaterhouseCoopers' regional financial services practice.

Debt restructuring, the sale of land and an increase in management fees all combined to finally help the embattled Bahraini investment bank Gulf Finance House return to profit.

The bank, which has been hit hard by the financial crisis, yesterday reported net profits of US$ 4.7 million (Dh17.26m) for the second quarter of the year - up from a net loss of $11.2m for the same period last year.

Despite the apparent turnaround, Gulf Finance House shares were unmoved at 18.5 US cents yesterday, their lowest level since February, as investors and analysts remained sceptical about its prospects.

Fresh investigations by prosecutors have shown that four Australian executives inflicted a loss of Dh142 million on Nakheel’s Water Front Project, Gulf News has learnt.
On July 15 the Dubai Court of First Instance returned the graft case, famously known by the Dubai Waterfront, involving two former Nakheel executives and two runaway suspects, who were earlier charged with causing deliberate loss of Dh44 million, to probe uninvestigated incidents after four years of proceedings.
The two former executives are the 43-year-old executive director, M.J., and the 40-year-old operations manager, M.R.

Swiss private bank Julius Baer is to buy Bank of America’s non-US Merrill Lynch wealth manager, paying 860 million Swiss francs ($882 million) for the loss-making business to boost its assets managed by 40 per cent and backing the deal with plans to raise 1.19 billion Swiss francs (Dh4.47 billion) in new capital.
The acquisition, the latest in a string of purchases for deal-hungry Baer, is the bank’s most assertive move since it bought Ehinger Armand von Ernst, Ferrier Lullin & Cie, BDL Banco di Lugano and asset manager GAM for 5.6 billion francs from UBS in 2005.
But the cost of the deal, including the new capital requirements, was taken badly by investors, who sent the shares sharply lower in early trading. At 0939 GMT the stock was down 5.6 per cent at 33.44 francs (Dh125.69), while the Stoxx Europe 600 banking sector index was up 0.4 per cent.

The extraordinary case of Zack Shahin, the ex-chief executive of Deyaar, a Dubai-based real estate company, took a dark turn this week after reports emerged that he had fled to Yemen whilst on bail and was re-arrested there.

“Shahin is still being detained by the security apparatus,” a Yemeni security source, who declined to be named, told Reuters on Sunday. “We expect that the man will be deported to the UAE before the end of the week.”

Shahin was caught up in a corruption investigation that swept across state-linked developers and financial companies before Dubai’s real estate boom imploded. He was released from prison on July 12 after facing three years of inconclusive trials.

Saudi Arabian banks will cut their bad-loan ratio to the lowest since the region’s biggest corporate default three years ago as lending grows on the back of government spending, Moody’s Investors Service said.
The ratio of non-performing loans at Saudi lenders will drop to about 2.5 per cent this year, the lowest since at least 2009, Khalid Howladar, a vice-president at Moody’s, said on August 9. That compares with forecasts of 8.5 per cent this year in the United Arab Emirates, the second-biggest Arab economy, and 4.2 per cent in the US last year, according to Moody’s.
Banks in the world’s top oil exporter are lending at the fastest pace in more than three years as the government’s $514 billion spending programme encourages companies including Saudi Arabian Mining Co. and Saudi Acrylic Monomer Co., to expand. Loan growth is recovering after two Saudi family holding companies, Ahmad Hamad Al Gosaibi & Brothers Co. and the Saad Group, defaulted on at least $15.7 billion of loans in 2009, a shock that prompted banks to virtually freeze new lending.

But the latest developments don’t herald the end of the long-running political conflict between the Muslim Brotherhood backing Morsi and the army. The president has won an important battle but he has not won the war.

The new President of Egypt is taking the concept of getting work done in the first 100 days in office very seriously.
Mohamed Morsy forced out the long-serving head of the military Field Marshal Mohamed Hussein Tantawi, his number two, and a handful of other generals. At the same time, Morsy nullified the constitutional declaration made by the military council before he took office June 30th.
His message is clear. And while the military wanted to sustain its grip on power, Morsi was able to wrestle control after what was seen as a military lapse in the Sinai.

Egypt's benchmark index rose 1.5 percent on Monday after President Mohamed Mursi curbed the army's powers and retired the country's two top generals, removing the biggest challenge to his authority six weeks after he took office.
Equities rallied after Mursi won a presidential vote in June but the lingering influence of the military has prolonged more than a year of political uncertainty that stymied investment and left the economy floundering.
Some analysts said the absence of a strong reaction from the military leadership since Mursi moved on Sunday to wrest key constitutional and legislative powers from the military suggests it has acquiesced.

Morocco's budget deficit jumped almost five-fold in the 12 months to end-July, following the entry into effect of higher wages and pensions for the public sector.

The budget deficit stood at 23.6 billion dirhams during the January-July, 2012 period up from 4.2 billion dirhams a year earlier, finance ministry data showed.

The public sector wage bill rose 13.4 percent to 55.9 billion dirhams by end-July while spending on subsidies stood at 31.9 billion dirhams, which is 57.5 percent above its level in January-July, 2011, the data showed.

The US is going to be free from the tyranny of imported crude oil soon, according to just about everyone. This is thanks to the wonders of shale gas extraction technologies being applied to sizeable and mostly untapped shale oil reserves. Previously marginal resources can now be economically extracted. Even the Europeans are getting excited about it. It’s a game changer.

You can probably guess what’s coming next…

Bernstein Research’s Bob Brackett (H/T Steve Levine) has an interesting note which examines the performance of shale oil wells in the Bakken formation. While the formation is in both Montana and North Dakota, Brackett narrowed his analysis to those in the former state.

Swiss bank Julius Baer is buying the non-US wealth management business of Merrill Lynch that was acquired by the Bank of America in a rescue during the 2008 global financial crisis for $880 million.

The deal includes the Merrill Lynch wealth management business in the Middle East whose research is widely respected. No details about Julius Baer’s plans for this division were made immediately available but will doubtless follow in due course.

Emirates Aluminium Co., the company building the world’s biggest aluminum smelter in the United Arab Emirates, is seeking to raise $4 billion from loans and bonds to finance expansion, a banker familiar with the plan said.
The Abu Dhabi-based company also known as Emal aims to raise $500 million in loans from four export-credit agencies, between $2 billion and $2.5 billion from commercial-bank loans and the remainder by selling bonds, according to the banker, who asked not to be identified because the information is private. The amortizing bank loans, to be repaid over 15.5 years, may be both conventional and Islamic, although their relative proportions have yet to be finalized, the banker said.
A spokeswoman for Emal, a venture between Abu Dhabi’s Mubadala Development Co. and Dubai Aluminium Co., wasn’t able to comment when contacted by phone today. Banks were sent requests for proposals last week and have until Sept. 28 to bid, the banker said. The fundraising for the $4.58 billion expansion will be completed this year, the banker said.

When Qatar opened its first hospital in 1957, few could have imagined the surging demand that would be placed on the country’s fledgling healthcare system in the coming decades.
More than half a century later, Qatar is now rolling out an even more ambitious first: a scheme to introduce a universal healthcare system, driven by private insurance providers, by 2014.

As governments round the world struggle to put their finances in order, the government of Kuwait is facing criticism many technocrats could only dream of: that its oversize budget surplus reflects a state that is simply not spending enough.
Data released this week by the country’s Ministry of Finance shows Kuwait posting a surplus of 13.2bn Kuwaiti dinars ($46.8bn), or about 30 per cent of gross domestic product, in the fiscal year ending March 31. Capital expenditure, which includes long-term investments such as projects, equipment and land purchases, totalled only 64 per cent of budgeted spending, among the lowest proportion of the past decade.

Gulf Bank KSC (GBK), the Kuwaiti lender that lost $1.3 billion on derivatives trading in 2008, posted a 36 percent drop in second-quarter profit as provisions rose.
Net income fell to 5.4 million dinars ($19 million), or 2 fils a share, from 8.5 million dinars, or 3 fils per share, a year earlier, the bank said in a statement to the Kuwait Stock Exchange today.
“The bank further increased the precautionary reserve by 34 million dinars to reach 124 million dinars, in line with its strategic plan to create a ‘fortress balance sheet’ and to further its capacity to grow and expand,” Kuwait’s third- biggest lender by market value said.

Dana Gas PJSC (DANA) said it’s committed to find a “consensual solution” on a $1 billion Islamic bonds maturing in two months as its trade receivables increased.

“The company is committed to finding a consensual solution that is equitable to all stakeholders,” the Sharjah, United Arab Emirates-based company said in a statement to the Abu Dhabi stock market today. “The company will provide further updates as further progress is made.”

The yield on its 7.5 percent notes maturing Oct. 31 has soared this year on concern about Dana Gas’s ability repay and after its biggest shareholder, Crescent Petroleum Co., said it has no plan to provide cash to the gas producer. The notes slumped to 70.12 cents to the dollar today, lifting the yield to a record 217 percent, according to data compiled by Bloomberg.